What Is an Initial Exchange Offering [IEO] – Overview and Benefits

A brief description of what an IEO is, its many benefits, and how to participate in one.
In 2017 and early 2018, initial coin offerings [ICOs] they were the main way of raising capital for Blockchain-based projects. Numerous ICOs have appeared since the initial one, Mastercoin, in 2013.
The main idea of ​​an ICO is to collect profits either in Ethereal or in other cryptocurrencies. In exchange, the ICO creates a new token. Most of the time, there is a smart contract that manages the ICO. Its developers are the counterpart of the contributors.
Initial exchange offer
A Initial exchange offer [IEO] it is different from an Initial Coin Offering in exactly that: the counterparty. The counterparty of an IEO is a cryptocurrency exchange [or several exchanges].
The developers of the project mint new tokens and then send them to an exchange. [or several exchanges]. After that, the exchanges sell those tokens to individuals, either for Ethereum or other cryptocurrencies.
I like ICOIEO contributors may be required to meet certain conditions, including a minimum or maximum investment or a fixed token price.
If you want to become a contributor to a certain IEO, instead of sending Ether [or another crypto] to a smart contract [like in ICOs]you need to register an account on the exchange[s] and send cryptocurrencies to this account. When the OEI beings, you can buy the tokens directly from those exchanges.
Why are IEOs better than ICOs?
Why would anyone want to participate or conduct an IEO when there are numerous ICOs out there today, many of them quite successful?
Here are the various benefits of Initial Exchange Offers:

  1. The developers take advantage of the exchange’s existing user base to attract investment for the offering.
  2. It is much more difficult to fool contributors, since they can buy tokens exclusively on the exchange.[s].
  3. All reputable exchanges perform their own due diligence on the IEO project, giving investors confidence that it will be a success story.
  4. Dodging a “Gas War” between participants in the sale, assuming the exchange [or group of exchanges] it is not decentralized. To this day, not a single IEO has taken place on a decentralized exchange.
  5. It is a rational next step on the ladder to include the IEO in the exchange that has taken place.

How to invest in an IEO?
The first thing you should do before even considering participating in an IEO is due diligence. Do it not only for the project, but also for the team behind it. So, you need:

  1. Find out which exchanges are running the Initial Exchange Offering. Remember that there may be a number of exchanges that host the IEO.
  2. Sign up for an account on the exchange [or group of exchanges]. This may include Know Your Customer [KYC] and whitelist procedures.
  3. Determine which digital currencies will be accepted at the IEO during crowdfunding and top up your account accordingly.
  4. Wait for the start of the IEO and get your tokens!

How do exchanges benefit from IEOs?
Running an exchange is a very lucrative business, largely due to trading fees. Here are other ways exchanges benefit from IEOs:

  1. IEO listing fees. As a general rule: the larger the exchange, the higher the fee.
  2. A wave of new users and depositors. A good number of them could become loyal exchange users.
  3. Marketing efforts combined with the team behind the IEO.

The future of IEOs is at least as exciting as that of ICOs. Hopefully, this brief summary will give you an idea of ​​how to proceed when it comes to this crypto trend.
Here is a website where you can explore the current ieo list.